Fannie, Freddie: On Borrowed Time

Investors must realize the mortgage giants aren't coming back to life. And home buyers should understand the alternatives will charge more.

Even after their financial collapse and massive taxpayer-funded bailout, Fannie Mae and Freddie Mac are still the colossi of the U.S. home-mortgage market. They own or guarantee repayment on more than half of the system's $10 trillion in outstanding mortgage debt. More astonishing, these agencies are making money again -- lots of it -- under tightened government supervision and aided by strengthening home prices. Once their second-quarter numbers are released, they will show that the duo will have returned in dividends about $131 billion of the $187 billion that the government had to infuse into them following their...